Flipping the Risk and Reward Model of Higher Education

College and university graduates now leave school owing about $34,000 on average, which is up 70 percent from a decade ago, according to a recent report by the New York Federal Reserve Bank. Many people leave school without finishing a degree but with a huge debt burden; others graduate with debt but have difficulty finding good-paying jobs to begin paying off their loans. What is to be done?

One entrepreneur, Adam Braun, is hoping his startup's new approach could lead to widespread changes in how higher education thinks about financing, debt and employment. His year-long MissionU program will charge no tuition upfront and will only receive payment from students once they have a job paying at least $50,000. "Our real aim is to prepare students for the jobs of today and tomorrow debt-free," he said.

Before starting San Francisco-based MissionU, Braun was founder and CEO of Pencils of Promise, a nonprofit organization that has built nearly 400 schools around the world. In a recent Future Trends Forum videoconference discussion hosted by futurist Bryan Alexander, he spoke about his motivation for launching MissionU.

"This problem really became personal for me when I met my wife. After almost three years of college, she ended up in so much financial hardship that she had to start working," he said. She became one of more than 30 million Americans who have some college credit but not a bachelor's degree. "That debt is on such aggressive interest rates that it continued to grow, no matter how much she tried to pay down," he said. "By the time I met her, her loans had grown to more than $110,000. It became very personal because I saw the toll it was taking on every aspect of her life. I thought there has to be a better way."

MissionU is being designed as a one-year college alternative in which students will rapidly "skill up" in an immersive, accelerated program that helps them land jobs in high demand now. "We want to align with the success of students," Braun said. "When you are accepted to MissionU, we commit to investing in you. Once you receive a job that pays $50,000 or more, you contribute 15 percent back to us for three years, so we can extend that opportunity on to the next student." That means the total cost for a MissionU education starts at $22,500 (or higher, depending on a graduate's salary level).

Braun said MissionU hopes to help students accelerate through an education equivalent to the perceived value of an undergraduate degree. "For a lot of them, graduating [with a traditional degree] takes six years if they graduate at all, and they often face a tremendous amount of financial hardship to reach that place," he said. "There is not always an alignment of outcomes with the institution they are attending. We decided from day one to align our outcomes and our success with the success of our students."

Alexander noted that this model flips the usual higher education system of risk and reward on its head. He called it extraordinary that MissionU wouldn't charge students who fail to land a good-paying job.

"The goal here is not to create a stand-alone institution that does good work. The goal is to transform higher education, period," Braun stressed. He said he wants to make it more just, equitable and accessible for students across the country — in particular, for traditional undergraduates.

"If we don't do that, then we will have massive ramifications for the entire well-being of our society for the next generation," Braun added. "At MissionU we are willing to put our stake in the ground and do something so different from the norm that it will apply pressure to respond." He said he doesn't expect every college to suddenly get rid of its traditional tuition model and create income-share agreements. "But I do hope that what we are doing will have some administrators asking why they aren't taking on some of that risk or being held to the highest standards of accountability for student outcomes."

The first MissionU cohort, beginning September 2017 in San Francisco, will focus on data analytics and business intelligence. Limited to 25 spots, that first cohort has had 4,500 applicants, Braun said. Most applicants have completed some college coursework but do not have a degree yet. Students should expect to spend 40 hours per week on the coursework, but could hold down a part-time job as well, he added.

Curriculum is informed by MissionU's industry partners, companies that serve as subject-matter experts in the skills and experience students need to succeed in the workforce. Students have the opportunity to work on real-world projects for partner companies, which are also potential employers: "Having informed their education, partner companies can confidently hire MissionU grads, knowing they have the skills and experience to immediately make an impact," according to the MissionU website. Current partners include Spotify, Uber, Warby Parker, Lyft and 2U.

The majority of course meetings will happen synchronously online, but all students must live within 50 miles of the city the cohort is based in, because in addition to online components, there are some face-to-face meetings for project-based work and building soft skills, Braun said. Cities being eyed for expansion include New York, Los Angeles and Atlanta.

MissionU is incorporated as a public benefit corporation, Braun noted. That means it uses a for-profit tax structure, but one that allows the company to serve its social mission at times even if it isn't purely in the best financial outcome interest of investors, he said.

Alexander asked Braun why he chose to go the startup route rather than partnering with a large university.

After speaking to a wide range of higher education officials as well as non-traditional educators and investors, Braun said, he came to realize that sweeping systemic change happens through two forces. "First, you need some type of innovation that happens initially at the fringes — and then people start to realize there is merit here and start adopting it in the mainstream," he said. "On the other side, you need policy and advocacy, but policy and advocacy don't happen without proof points in the actual space. So once I started to speak with folks in traditional academia, there were elements of what I wanted to do that were appealing to them, but they kept on coming back to how challenging that would be to get through a large bureaucracy." Braun said that to create something that was going to rapidly enter this space and have some strong ripple effects, it had to be as a startup.

"Over time, building partnerships with existing institutions is going to be a part of the long-term story of MissionU," Braun added. "It will be essential. Our hope is that some of the things we are able to do get adopted by larger institutions and that over time we can effectively partner together."